The Silicon Valley-based venture capital firm is currently fundraising a $200 million agtech fund and recently announced a first close on $37.5 million. This is Finistere’s second fund and Arama Kukutai, partner at the firm, expects that it will invest in increasing numbers of growth and late-stage agtech firms as the industry develops.
How did you get into the agtech sector?
I grew up in a farm family in New Zealand and have been in agribusiness, investing and international trade for many years. Finistere’s agtech fund was started by myself and Jerry Caluder together in San Diego in 2005 when we saw, at the time, great demand for technologies used in agriculture to increase the productivity and quality of food. We felt that there was a gap that venture capital had not addressed.
How has the agtech sector changed over the past 10 years?
There were very few funds invested in agtech back in 2005 – about half a dozen VC funds – but in 2015 there is a much bigger number and a wider pool of innovation investors in agriculture. Mainstream VCs, sovereign funds, corporate ventures and family offices are investing in it too. There are also more new, disruptive start-ups are increasing in number in the sector. While the fundamentals of agribusiness haven’t changed over the past decade, agriculture has benefited from the cost curves of enabling technologies ranging from genomics to big data.
Who are your partners in Finistere Ventures II?
Bayer CropScience and AVAC are among the limited partners in the fund. There were other LPs in the first closing and we will bring in more at the next closing but we can’t disclose their information due to confidentiality. We partnered with Bayer Crop Science because they are a leader in crop science and protection and integrated management of farming solutions – expertise and networks we know will help our portfolio companies and our fund.
What is Finistere’s strategy?
We will continue to invest in early-stage companies but the maturing of the agtech sector means that we will be looking at growth and late-stage deals as well. The rise of the digital era and the engagement of Silicon Valley have made the sector both more visible, enabling it to grow faster and bring in more entrepreneurs. Internationalisation has played a big role in this growth of opportunity and a focus on engaging technologies from outside North America is a key differentiator in our strategy. Food security, climate change, decreasing amounts of agricultural land coverage are issues for all nations and we are seeing exciting technologies globally seeking to address these challenges in safe and abundant food supply.
What is Finistere’s pipeline looking like?
There are hundreds of potential investments in our pipeline but we are currently working on three major deals that include technologies developed in New Zealand, Canada and Israel as well as those we plan to finance in the US.
How does the US market compare to others for agtech?
Compared to other markets, the US market still has the most potential for agtech companies to grow. The US is both the largest agtech market and developer of technology. But technology goes global very quickly; rising demand for sustainable and quality food in greater Asia is driving innovation needs meaning we will see an increasingly international market for agtech in the future.